Research: SaaS 2011

Michael Biddick02/28/11

SaaS Adoption Soars, Yet Deployment Concerns Linger

Forget the Tea Party—software as a service is the real revolution. In our InformationWeek Analytics 2010 SaaS report, we called for CIOs to filter through the cloud computing hype and develop a realistic plan to incorporate SaaS. There’s just no reason enterprise IT teams should be bogged down delivering commodity services, and the outsourced option should be on the table whenever a new IT-driven capability is requested by the business.

In our 2010 poll, 47% of respondents were using SaaS. What a difference a year makes. We surveyed 275 business technology professionals, all of whom are involved in their companies’ enterprise applications strategies, for our InformationWeek Analytics 2011 SaaS Survey and found that today, 60% are using applications in the cloud, up 13 points in 11 months—one of the biggest adoption jumps we’ve seen for any technology category in such a short period.

Deployments are still not trouble free. More respondents express concerns over features and functionality. Those citing opex savings as a key decision driver went up three points, making us wonder about these companies’ budget processes. And, in our 2011 survey, 26% rate the applications currently delivered as services as mission-critical to the organization, down from 34%.

What’s not down is the number of SaaS providers taking on giants like Microsoft, Google and Salesforce.com. In our survey, when we asked about SaaS vendors in use, in addition to our list, we got more than 60 write-ins across just about every functional IT area. For smaller companies, such a rich applications landscape was the stuff of dreams just a few years ago.

"Our staff now spends time producing content rather than building and maintaining sites, software and equipment,” says one IT manager for a group of radio stations. “Cost is reduced, content is dramatically increased since they have more time to create it, and quality is universal at multiple locations and facilities. I will be looking for other ways to use SaaS for accounting, billing and business functions.”

While in our practice we’ve seen significant reliability and security strides made over the past year, this organization is still maintaining in-house backups of critical content, a smart move. Problems also remain around integrating outsourced applications into internal IT architectures, and it’s an open question whether SaaS vendors operating on thin margins can keep customers happy. (R2010311)